DRS: Fixed Capital Investment 01MAR2012

Fixed Capital Investment Tax Credit

Conn. Gen. Stat. §12-217w


Description and Applicable Taxes

A tax credit may be applied against the tax imposed under Chapter 208 of the Connecticut General Statutes for amounts paid or incurred by a corporation for fixed capital.

 

 

Definitions

Fixed capital means any new tangible personal property that meets all of the following criteria:

  • It must have a class life of more than four years;
  • It must have been purchased from someone other than a related person;
  • It is not leased or acquired to be leased to another person within 12 months of purchase; and
  • It will be held and used in Connecticut by a corporation in the ordinary course of the corporation’s trade or business in Connecticut for a period of not less than five full years following its purchase.

Fixed capital does not include:

  • Inventory;
  • Land;
  • Buildings or structures; or
  • Mobile transportation property.

Related person means a corporation, partnership, association, or trust controlled by the corporation; an individual, corporation, partnership, association, or trust that is in control of the corporation; a corporation, partnership, association, or trust controlled by an individual, corporation, partnership, association, or trust that is in control of the corporation; or a member of the same controlled group as the corporation.

With respect to a corporation, control means ownership, directly or indirectly, of stock possessing 50% or more of the total combined voting power of all classes of the stock of the corporation entitled to vote; with respect to a trust, control means ownership, directly or indirectly, of 50% or more of the beneficial interest in the principal or income of the trust. Ownership is determined as provided in Section 267(c) of the Internal Revenue Code of 1986, or any subsequent corresponding Internal Revenue Code of the United States, as from time to time amended, other than paragraph (3) of that section.

 

Mobile transportation property is any transport equipment designed to move or convey people or property from one place to another, including but not limited to:

·        Trucks;

·        Buses;

·        Forklifts;

·        Snowplows; or

·        Certain construction equipments such as backhoes, bulldozers, cement mixers, and loaders.

 

 

Tax Credit Amount

The tax credit amount is 5% of the amount paid or incurred by a corporation for any new fixed capital investment. No corporation claiming this tax credit shall claim any other tax credit against any tax with respect to the same investment.

 

 

Carryforward and Carryback Limitations

Any tax credit not used during the income year in which the acquisition was made may be carried forward to the next five succeeding income years until the entire tax credit is used. No carryback is allowed.

 

 

How to Claim the Tax Credit

Complete Form CT-1120 FCIC, Fixed Capital Investment Tax Credit, and attach it along with any required detailed schedule to Form CT-1120K, Business Tax Credit Summary.

 

 

Recapture

  • If the fixed capital on account of which a corporation claimed the tax credit is not held and used in Connecticut in the ordinary course of the corporation’s trade or business in Connecticut for three full years following its acquisition, the corporation will be required to recapture 100% of the amount of the tax credit allowed on its corporation business tax return required to be filed for the income year immediately succeeding the income year during which the three-year period expires.
 
  • If the fixed capital on account of which a corporation claimed the tax credit is not held and used in Connecticut in the ordinary course of the corporation’s trade or business in Connecticut for five full years following its acquisition, the corporation will be required to recapture 50% of the amount of the tax credit allowed on its corporation business tax return required to be filed for the income year immediately succeeding the income year during which the five-year period expires.

 

Where to Get Additional Information

Direct inquiries to:


Connecticut Department of Revenue Services

450 Columbus Boulevard

Hartford CT 06103

1-800-382-9463 (Connecticut calls outside the Greater Hartford calling area only), or

860-297-5962 (from anywhere)

www.ct.gov/DRS

 

 

Statutory and Regulatory References

Conn. Gen. Stat. §12-217w

 

 

Last updated March 1, 2012